The proposed project, Avallon MBO Fund II, is a specialised private equity fund with the objective to invest primarily in management buy-out and management buy-in transactions. The Fund will invest predominantly in Poland with up to 33 per cent in other new EU member states. The Fund will seek to acquire controlling interests in small to medium-sized companies while investing its capital alongside management teams, empowering managers and supporting the expansion of private ownership. It is expected that individual equity investments will be between EUR 5-10 million (with the average value of investment of approximately EUR 7-8 million).
The transition impact of the proposed project would come from the following areas:
Demonstration of MBO and MBI transactions in Poland and the Region via supporting a specialised private equity fund
MBO/MBI transactions are still unusual in CEE with Avallon being the only specialised fund concentrating on MBO/MBI transactions and currently focusing on Poland. Its second fund will facilitate further ownership changes within the SME segment, and will expand its reach geographically both through expanding regionally and working with the management of companies to expand cross-border.
Provision of equity funding to SME clients who remain outside the scope of interest of larger private equity funds
The Fund will address capital gaps that SMEs face on the market generally and will also help to show that private equity funds have the capacity to address this segment of the market. Generally, local and regional private equity houses focus on larger ticket deals than the sub-€15 million investments.
Demonstration of investee company shareholding restructuring, expansion and corporate governance
The Fund can substantially contribute to strengthening and supporting the expansion of the investee companies whilst implementing good corporate governance as the company makes the transition to one owned by professional managers.
Avallon MBO Fund II will be established as a limited liability partnership, registered in the Netherlands. It will be managed by its general partner, Avallon Partners II B.V., a Dutch limited liability company.
Founded in 2001 by three partners, Avallon grew to become a specialised consulting firm advising on MBO transactions whilst also making its own proprietary investments. In 2007 it raised an institutional quality private equity fund investing in MBO transactions. Avallon MBO Fund II will be its second fund.
The EBRD is considering a commitment of up to €27 million to the Fund. It is expected that the remaining commitments may include a range of institutional investors, as well as commitment from the General Partner.
The target size of the Fund is €107 million with a hard cap of €120 million.
The Fund will be required to comply with EBRD's Performance Requirement 2 (Labour and Working Conditions) and Performance Requirement 9 (Financial Intermediaries). Investee companies will be required to comply with national environmental and OHS standards and national labour laws. An Annual Environmental and Social Report will be prepared by the Fund and submitted to the Bank.
Mr. Tomasz Stamirowski, Managing Partner
Avallon MBO Fund
Al. Kosciuszki 17
90-418 Lodz Poland
Tel: +48 (42) 630 97 71
Fax: +48 (42) 630 97 75
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